Today, more millennials are moving back home even though the economy is improving and wages are inching upward.
Recently, Pew Research Center revealed that a third of young adults today are more likely to live with their parents than they were before the Great Recession.
Unemployment among young adults has been dropping since 2010 as has the number of millennials living independently.
In 2007, prior to the recession, about 42.7 million individuals in that age group lived on their own. In the years in between, the population of 18- to 34-year-olds grew by 3 million, yet the share of millennials living independently has decrease from 69 percent in 2010 to 67 percent this year.
The trend is despite the good news that employers plan to hire 11 percent more new college graduates this year than they did in 2015, according to the National Association of Colleges and Employers’ 2016 Job Outlook Report. This figure applies to all majors and degree levels, but it is more noticeable for STEM graduates — science, technology, engineering and math.
The “not-so-good news” is wage growth continues to be sluggish dropping from just under 4 percent in 2008 to a post-recession high of 2.5 percent in December and January according to the U.S. Bureau of Labor Statistics.
Earlier this year, Business Inside’s Bob Bryan wrote the underlying reasons for the “move back home trend” are a variety of economic factors. They include student debt, high costs of first-time homes, escalating rents and slower-than-expected economic growth over the past few years.
Rent Jungle, an online firm which compares apartment rents nationally, finds that monthly rents in west coast metropolitan areas are too expensive. For example, in February, a two-bedroom apartment in San Francisco averaged $4,126 compared to Seattle ($2,125), and Portland ($1,450). Spokane checks in at $755.
Apartment List, a San Francisco-based apartment rental research firm, surveyed 30,000 renters and found student loan repayment coupled with high rents reduces the young people’s ability to save enough for a down payment on their first home.
It reports that 58 percent of the college-educated millennials have monthly student loan payments averaging $410. It takes them now 10 years to save enough for a down payment on their first home.
The bad news is young graduates cannot afford to buy homes in high-priced west coast cities like Seattle and Portland. Young people without college degrees, can’t earn or save enough to buy homes in 20 of the 26 major metropolitan areas in America.
That is not good for our economy because sales of existing homes, housing starts and building permits are considered leading economic drivers.
When Pew concludes the growing young adult population living at home has not fueled demand for housing units and the furnishings, telecom and cable installations and other ancillary purchases that accompany newly formed households, it is worrisome for all of us.
Here are some steps which can help alleviate the problem:
First, our elected officials must find ways to stimulate job and wage growth in the private, taxpaying sector rather than impede it with burdensome regulations and high taxes and fees.
Second, parents and students must look for ways to lessen college expenses so their grown children have more disposable income and savings. A good way is for students to take classes at community colleges or on-line.
Third, business leaders should consider expanding or relocating in communities where housing and living costs are more affordable.
America’s future prosperity depends upon millennials’ success. They have to be greater economic contributors and deserve a better opportunity to get a place of their own and live independently.
Don C. Brunell is a business analyst, writer and columnist. He retired as president of the Association of Washington Business, Washington state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at theBrunells@msn.com.